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 / Winter 2006 / Issue 45(originally published by Booz & Company)


Best Business Books: Marketing

Paul W. Farris, professor of marketing at the  University of Virginia’s Darden Business School, and his coauthors Neil T. Bendle, Phillip E. Pfeifer, and David J. Reibstein explain each marketing metric so clearly that even the most numbers-phobic ponytails will want to incorporate them into pitches.

The book really becomes useful when it addresses calculations involving customers. The chapter on customer profitability is exceptional, providing a clear summary of all the issues involved in determining who is making money for your company, and who represents a parasite on your bottom line. The key lesson: All customers are not created equal. Essentially, the most profitable, or best, customers must be rewarded. Less profitable, second-tier customers must be targeted for sales and profit growth. Unprofitable customers must be either made profitable or fired.

In a category that suffers from a surfeit of books related to personal experiences, one-off success stories made possible by budgets and resources unavailable to most firms, outdated theories as quaint as bloodletting, or mantras devoted to “big ideas” or “exceeding expectations,” 50+ Metrics offers insights that crackle like new money. For CEOs and those in marketing trenches needing accountability, this is the best marketing book of the year.

Six Sigma’s New Frontier
Six Sigma has long been a favorite means of achieving accountability in many organizational functions — though rarely in marketing. Now consultants Clyde M. Creveling, Lynne Hambleton, and Burke McCarthy aim to change that with Six Sigma for Marketing Processes. The book focuses on three marketing processes in particular: strategic, defined as product or service portfolio renewal; tactical, which is product or service commercialization; and operational, or post-launch product or service line management. These components are then linked by information systems that allow data to flow seamlessly among all processes and integrated metrics. The book is important, in part, because Six Sigma’s outstanding track record is making many managers consider its potential to tame marketing, every company’s unruly child. Marketing managers have resisted so far, partly because of widespread misperceptions about the nature of Six Sigma.

The first misperception is that it is solely a manufacturing improvement tool. Yes, Six Sigma has achieved its most publicized successes reducing production errors, but it can be applied to any standardized process — and despite its aura of kooky creativity, marketing really is as process-oriented as manufacturing. Look at what is required to send out a press release, develop an ad, or prepare for a trade show: nothing more than a series of “to-dos” (aka processes).

Another misperception is that good Six Sigma practice requires statistical fluency. Yes, statistics are involved, but they are elementary. A half-day of study and a few common spreadsheet formulas will put you on the road to becoming a Six Sigma black belt. The final misperception is that Six Sigma is only about reducing errors or defects. Yes, that is a part of Six Sigma, but, much more important, Six Sigma is a data-driven system for understanding what customers value and delivering that value to them. Isn’t that what marketing is all about?

Like Six Sigma for other parts of the organization, Six Sigma for marketing seeks improvement by elimination of variability and waste in processes. It revolves around five steps, known by the shorthand DMAIC: defining the problem, measuring issues associated with the problem, analyzing the data to determine causes of problems, improving the process, and controlling the process so that the problem does not recur. Measurement is key. But Six Sigma practice doesn’t focus on the measurements that are easy to define and put to use. Rather, it looks for the leading indicators that enable proactive decision making.

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